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Creating a More Global Collaborative Asian Leadership

for the G20

Report of a conference at the Shanghai Institutes for International Studies, October

21–23, 2010, jointly sponsored by The Centre for International Governance Innovation,

The Stanley Foundation, The Munk School of Global Affairs at the University of

Toronto, The Lowy Institute and the Shanghai Institutes for International Studies.

Written by:

Alan S Alexandroff, Director Online Research, The Munk School of Global Affairs

David Shorr, Program Officer, The Stanley Foundation

With Evelyn Chan, Rapporteur

The opinions expressed in this paper are those of the authors and do not necessarily reflect the views of

The Centre for International Governance Innovation or its Board of Directors and/or Board of Governors.

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Executive Summary

On the eve of the first G20 summit to be hosted by a Asian country The Centre for

International Governance Innovation (CIGI), The Stanley Foundation (TSF), The Munk

School of Global Affairs, University of Toronto, the Lowy Institute and The Shanghai

Institutes for International Studies (SIIS) invited leading experts to Shanghai to evaluate

the prospects for collaboration and leadership by key Asian nations. The conference

sessions focused on the Seoul agenda and the perspective of the summit’s Korean hosts,

the perspectives from the large emerging market powers, perspectives from the

traditional advanced countries, other Asian countries including Singapore and Vietnam

as well as the prospects for collaboration more broadly. The main observations and

recommendations stemming from the conference were:

Notwithstanding the G20 summits’ legitimacy advantages over the traditional G8

leaders’ summits, the G20 has not yet solidified a permanent role;

In the view of participants, the immediate challenge for the G20 is to follow

through on the commitments and agenda from previous summits — particularly

financial stability, governance reform for the Bretton Woods institutions, and

strong, sustainable and balanced economic growth. The more ambitious vision of

a G20 tackling the full sweep of the global multilateral agenda, while championed

by some participants, was resisted by many.

A few issue areas seemed somewhat logical directions for an expanded G20

agenda in the near to medium term. Korea has been pressing the topics of growth-

led development and “green growth.” Other participants suggested the G20

leaders’ summit deal with the climate change financing issues in the Copenhagen

Accord. And the G20 has already been discussing elimination of fossil fuel

subsidies;

All participants agreed that currency and exchange rates had become a major

challenge for the G20 leadership. Although the Seoul summit might not fully

resolve exchange rate friction, finding a framework for rebalancing between

account surplus and account deficit countries would help multilateralize the

currency issue and avoid a heated and possibly unhelpful bilateral US-China

exchange over the dollar-renminbi exchange rate;

While Korea’s new approach to the development agenda drew praise for its

comprehensiveness, rigour and emphasis on local ownership, participants were

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concerned that the nine-pillar plan being prepared for Seoul may be seen as

insufficiently concrete or connected to traditional donor-oriented development

strategies promoted by the G8;

Participants were impressed with Korea’s outreach process to non-G20 nations,

regional bodies and key international institutions, especially the UN Secretary

General;

Korean participants also described possible models for the establishment of a G20

secretariat to further support summit preparation, implementation and

monitoring of national commitments, and the preservation of institutional

memory;

China’s well-known reluctance to embrace multilateral leadership clouds the

picture for future global governance. While Chinese experts cite the many decades

the United States took before embracing global leadership in the mid-twentieth

century, the challenges on today’s international agenda could make it harder for

China to resist pressures and expectations for its leadership. China’s desire to

protect its independence and freedom of action, especially over domestic

economic matters, is understandable, yet could erode the strength of the very

global system that enabled China’s rise. These tensions between sovereign

prerogatives and the global economic commons are already emerging in the

efforts of the G20. Conference participants from outside China noted

sympathetically that expectations of Chinese leadership might be unfair and yet

unavoidable;

Despite the conference theme of collaboration among the Asian G20 states,

participants resisted notions of special regional interests or a regional agenda in

global forums. In part, this reflected concerns that such collaboration could be a

slippery slope to establishing an Asian caucus and afflicting the G20 with the same

political bloc dynamics that have bedeviled the UN. But participants also offered

their assessment that the nature of the twenty-first century agenda promoted

shifting coalitions on a variety of issues. It was also pointed out that the European

countries’ caucus largely avoids the label of a bloc. Such consultation in Asia may

prove helpful in helping to fashion policies in global governance, though little

appears to be occurring at present.

The emergence of the G20 summits as an important multilateral forum reflects a

turning point in the changing global order in response to shifts in the distribution of

economic power. The increase in Asian seats at this “High Table” of global

diplomacy is likewise significant beyond mere symbolism, indicating the increased

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influence of key Asian states. But it is less clear whether this broader Asian

inclusion is accompanied by practical collaboration on their substantive concerns —

or whether these states are embracing greater leadership responsibilities.

The Shanghai conference benefited from participants from all the Asian G20 countries

except Japan (our Japanese colleague reluctantly had to cancel), as well as from Vietnam,

Singapore, Canada and the United States. Participants discussed the challenge for the

G20 to its momentum; its potential for managing other transnational problems; and the

role of the US and China in forging a new multilateral world. A number of key questions

remained open after thorough deliberation. Should the G20 mandate expand beyond

global financial and economic matters? Should Asian G20 countries consult with each

other more — not to create a regional caucus, but to develop through consultation ideas

that could be taken to the whole G20?

The hosts of the upcoming summit are pressing the so-called “Korean initiatives,”

which would add growth-oriented development, new financial safety nets and

regularizing G20 outreach to its agenda. Korean participants in Shanghai noted that

their country’s experience from the 1997 financial crisis (not to mention Korea’s

transformation from post-war devastation to the Organisation for Economic Co-

operation and Development [OECD] membership) gives it special credibility. As one

participant noted, Korea’s middle power status makes it well situated to serve as a

harmonizer between the status quo G7 countries and status-challenging Brazil,

Russia, India and China plus other countries (BRICs+). More immediately, the

challenge for Korea is to both preserve momentum on legacy issues from past

summits and build consensus on issues that would extend the G20’s mandate into

the future.

On the financial agenda, Korean participants noted recent progress “legacy” items

on financial regulation via the approval of Basel III. Looking towards a stronger

safety net system, Korean officials have worked with the International Monetary

Fund (IMF) to improve flexible credit lines and introduce precautionary credit lines

and globalization stabilization mechanisms. These reforms provide a buffer for

reserve-poor states and also contribute to a broader effort to reduce self-insuring

accumulation of foreign reserves and help lessen the imbalance between capital

account surplus and capital account deficit states.

On the growth-oriented component of Korea’s development initiative, delegates

praised it as a substantive break from previous G8 approaches to global poverty. In

the past, host countries simply sliced out a specific aid issue, usually related to the

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UN Millennium Development Goals, and sought funding pledges from others at the

summit. A Korean delegate argued that these summit pledges were ineffective in

tackling development challenges as well as out of touch with the needs of low-

income countries. Korea has worked closely with South Africa in the G20’s new

Development Working Group and consulted with low-income countries to develop

the nine-pillar development plan for the Seoul summit. The initiative was praised as

being more comprehensive and effective, presumably, by its long-term multi-year

action strategy, which includes mechanisms to evaluate developmental needs and a

transition plan for France and Mexico to monitor commitments to development

initiatives.

Korean participants also highlighted their country’s extensive process of outreach to

non-G20 nations. Summit conveners have consulted with regional bodies,

international institutions and have met with non-members on a regular basis to

report back to G20 members. “Korea’s decision to extend invitations to the United

Nations Secretary General as well as to five non-members, Singapore as Chair of the

3G (Global Governance Group), Vietnam as the Chair of the Association of Southeast

Asian Nations (ASEAN), Spain and Ethiopia and Malawi as the Chair of the New

Partnership for Africa’s Development (NEPAD) and the African Union respectively,”

would, Korean officials hope, “go a long way to address the representation deficit

problem.” It was also proposed that leaders at the Seoul summit should establish

general operating principles for the invitation of non-G20 members and devise a

scheme for the rotation of chairmanship.

The potential establishment of a secretariat structure is aimed at systematizing

summit preparations, implementation and monitoring of commitments and the

preservation of institutional memory. Alternatives to the traditional notion of a

secretariat were raised, including a “secretariat-non-secretariat” model and a two-

tiered approach. The former suggests a revolving secretariat based on a

“management Troika” with Sherpas of the preceding, present and next summit hosts

at the centre. The two-tiered approach would add a permanent technical staff

responsible for monitoring, archiving, record keeping and evaluating. Given

sensitivities that a permanent secretariat would feed concerns about G20

usurpation of the UN, this could start with the experiment of a cyber or virtual

secretariat.

There was a general agreement among participants that the G8 is an exclusive club

that no longer reflects the current global power distribution. The elevation of the

G20 in global governance is a significant step in bringing emerging market and

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developing states into the global decision making process. Nevertheless, the fact

that the G20 is a self-appointed body — without clear mechanisms to represent non-

members, international institutions and regional bodies — inevitably raises

questions of legitimacy.

There were differences among participants regarding whether the G20 should

expand membership, to whom and how it should institutionalize a membership

selection process. Chinese participants were quite cautious about expanding

membership. In the view of several Chinese scholars, it is too early to talk about

expansion and representation at this stage in the G20’s development. Increasing

membership now could decrease the effectiveness of the body, overwhelm or draw

the agenda away from global economic challenges. Expansion can only exacerbate

the collective action problem. In contrast, other participants portrayed the

membership issue as essential to the longevity of the G20. One American participant

noted if it fails to address structural questions like membership, the “G20 can over

time follow the way of the G8 and UN Security Council where membership is out of

step with the real world.” One possible scheme would recalibrate G20 membership

every five years, automatically choosing the top two economies from five or more

regions and 10 economies after that. Although extending invitations to regional

groups such as ASEAN is a positive step, one participant noted that these

organizations cannot represent all small- and medium-sized countries. Moreover,

summit leaders have not invited all regional bodies from all regions, noting the

absence of the Gulf Cooperation Council and Latin American bodies. To ensure fuller

representation of non-members, the 3G representative from Singapore echoed

support for a variable geometry mechanism to allow non-members to participate in

ministerial and working groups.

Several scholars agreed that the G20 should develop closer institutional ties with

the United Nations, with its highly developed structures for consultation and

implementation. Given that the G20 is informal and can only deal with issues via the

crude political will of world leaders — owing to its lack of a treaty mandate or

implementation capacity — the G20 inevitably has to work with the UN as well as

with other international bodies to consult and coordinate on policy measures. A

scholar from Vietnam also echoed that without a membership structure, it would be

difficult for small and medium countries to see the G20 as a legitimate body. He

proposed that the G20 develop a mechanism to formalize the participation of

regional institutions.

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Report

Shanghai Conference Purpose

In the realm of global governance and multilateral cooperation, there is no clearer

sign of Asia’s growing prominence than the composition of the G20 Leaders’

Summit, where Asian participation has grown from one G8 member — Japan — to

six in the G20 — Australia, China, India, Indonesia, Japan and the Republic of Korea.

The increase in Asian seats at the “High Table” of global diplomacy — especially

with the addition of India and China — is significant beyond mere symbolism. But

this adjustment of global governance leadership to reflect the increased influence of

key Asian states has not been accompanied, it appears, by practical collaboration on

their substantive concerns — notwithstanding the many Asian regional

organizations and the Asia Pacific Economic Cooperation.

This conference was designed to bring together experts — academic, policy and

former practitioners — to evaluate the prospects for collaboration, and to

encourage, where possible, such collaboration. It uses the attitudes of Asian G20

members toward the group’s agenda and process to examine whether the

rudiments of an Asian global governance agenda can be gleaned from their

respective priorities. Is there significant common ground on global governance

issues ranging from economic and financial regulatory issues to climate change and

peace and security? With that identified, the project then hoped to assess these

national priorities against the objectives of the G20 and other key multilateral fora

— and thereby explore the likelihood of cooperation by these Asian members.

Raising questions over the prospects of cooperation, in turn elicit other important

questions, including further adjustments to the international system. Can the

experts affirm and describe how such an enhanced Asian presence in this enlarged

members club needs further recognition and reform? If such influence is still largely

unacknowledged, can the experts describe how such collective influence can be

constructively drawn for the G20 leaders’ summit? Especially for the large emerging

market countries — India, Indonesia and China — is there an appetite for

leadership? If there is, how can such leadership be fostered? If not, how can such

leadership be encouraged?

This gathering of experts in an informal setting was proposed so that experts could

describe diplomatic cooperation and convergence in the region and evaluate the

contribution such leadership could make toward solving the significant challenges

on the G20 agenda. Where collaboration is seen as notably absent, the experts could

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also indicate what shifts in national perspectives might be needed to develop

common perspectives in the G20 and other key forums.

Partners

The Centre for International Governance Innovation (CIGI), The Stanley Foundation

(TSF), The Munk School of Global Affairs, University of Toronto, The Shanghai

Institute for International Studies (SIIS) and the Lowy Institute agreed to become

partners in staging this conference at SIIS.

Seoul Summit November 11–12, 2010

Approaching the Seoul Summit

The G20 leaders’ summit in Seoul, Korea reflects a turning point in the changing

global order. The global financial crisis in 2008 transformed the G20 finance

ministers and central bankers into a leaders’ summit. By the Pittsburgh summit in

September 2009, the G20 leaders’ summit became — self identified by G20 leaders

— the prime forum to deal with global economic issues. With the inclusion of the

large emerging market economies, like China and India, the G20 leaders’ summit

represents possibly the institutionalization of a new multilateral order that reflects

real shifts in global economic power redistribution, particularly in Asia. On a

normative level, there was a general consensus among Shanghai participants that

the international architecture should reflect these changes. For the participants, the

G20 as opposed to the G8, is a more legitimate and effective body to deal with global

financial and economic issues. The major question is, therefore, not whether the G20

should continue, but how can the G20 stay. The debate among conference

participants centred on the G20 and how it can sustain the momentum from the

earlier summits; the potential for the G20 to manage other transnational problems;

and the role of the US and China, in particular, in forging a new multilateral world.

Should the G20 expand its mandate beyond global financial and economic matters?

Should the G20 remain an informal leaders’ forum or become a more

institutionalized body?

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Challenges for the Seoul Summit

From the perspectives of the Korean participants, the Seoul summit represents an

important point in the transformation of the G20, moving from a crisis committee to

a more permanent steering committee on global economic issues. To consolidate the

G20 as the premier international forum, it is important that the Seoul summit be

able to sustain cooperation on agenda items that were introduced in earlier

summits, including Pittsburgh and Toronto summits: coordination of

macroeconomic policies of individual countries; international financial institution

(IFI) reform; and financial sector regulatory reform.

Korean officials also seek to achieve consensus or forward cooperation on the so-

called “Korean initiatives,” which adds growth-oriented development, financial

safety nets and outreach to the agenda. Korean delegates noted the country’s

experience from the 1997 financial crisis (not to mention Korea’s transformation

from a devastated war-ravaged economy to a strong OECD economy) adds

credibility to the development agenda and can help move the G20 beyond the crisis

focus agenda. As one participant noted, Korea’s middle power status makes it

appropriately situated as a harmonizer between the more status quo G7 countries

and status-changing BRICS+ countries. However, a Korean scholar also identified a

more parochial intent, in that it is in Korea’s national interest to focus the agenda on

structural and institutional questions. Given Korea’s G20 membership is the first

time Korea has been invited to host a leaders’ summit, and a major international

meeting, consolidation of the G20 as a formal body can sustain Korea’s engagement

in global decision making on economic affairs. In this view, the Seoul summit may be

a used as forum and platform for middle power counties like Korea to advance

further discussion on formalizing G20 mechanisms and procedures. The challenge

for Korean officials is to balance the Seoul agenda between sustaining momentum

on legacy issues from past summits and achieving consensus on issues that would

extend the G20’s mandate into the future.

Seoul Agenda: Objectives and Possible Achievements

On the issue of financial safety nets, Korean delegates note that progress has been

made, especially on “legacy” items from previous commitments on financial

regulation and by securing the approval of Basel III. Korean officials have worked

with the IMF to improve flexible credit lines and introduce precautionary credit

lines and globalization stabilization mechanisms. These reforms provide a buffer for

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reserve-poor states, contributing to a broader effort to reduce self-insuring

accumulation of foreign reserves and lessen the imbalance between capital account

surplus and capital account deficit states.

On the growth-oriented component of the development initiative, delegates praised

it as a substantive break from previous G8 approaches to global poverty. In the past,

host countries selected a specific aid issue, related recently to Millennium

Development Goals, and persuaded other members to pledge support. A Korean

delegate argued that these summit pledges were ineffective in tackling development

challenges as well as it was out of touch with the needs of low-income countries.

Korea has worked closely with South Africa to establish the Development Working

Group and has consulted with low-income countries to develop the nine-pillar plan

that will be released at the Seoul summit. The initiative was praised as being more

comprehensive and effective, presumably, by its long-term multi-year action

strategy, which includes mechanisms to evaluate developmental needs and a

transition plan for France and Mexico to monitor commitments to development

initiatives. As one Korean participant commented, addressing global imbalance goes

beyond trade imbalance. Emerging markets and developing countries have

significant infrastructure needs. The Korean initiative on growth-oriented

development addresses these structural development gaps.

Korean delegates also highlighted the significant process that Korea has undertaken

on the question of outreach. Summit officials have consulted with regional bodies,

international institutions and have met with non-members on a regular basis to

report back to G20 members. “Korea’s decision to extend invitations to the United

Nations Secretary General as well as to five non-members, Singapore as Chair of the

3G, Vietnam as the Chair of ASEAN, Spain and Ethiopia and Malawi as the Chair of

NEPAD and the African Union respectively,” would, it is hoped by Korean officials,

“go a long way to address the representation deficit problem.” It was also proposed

that leaders at the Seoul summit should establish general operating principles for

the invitation of non-G20 members and devise a scheme for the rotation of

chairmanship.

During the workshop, three membership models for non-G20 members were raised.

“If the future of the G20 is agenda-based then a variable-geometry approach is

appropriate for membership. If the focus is on regional representation, then

membership should be determined on a floating-basis. If G20 membership is based

on more normative principle of democratic representation, leaders should devise a

constituent system.” A Korean participant also stressed the need for a more

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institutionalized division of labour between the G8 and G20. Various joint initiatives

could be undertaken between the two bodies, such as inviting the G20 chair to the

annual G8 meetings, holding joint Sherpa meetings and drafting joint work

accountability reports.

The agenda issue regarding the establishment of the secretariat reflects concerns for

a more structured and systematic approach to summit preparations,

implementation and monitoring, and the preservation of institutional memory.

Korean participants recognized the criticisms against the creation of a secretariat,

especially for its lack of cost efficiency. Nevertheless one scholar stressed that it was

important for leaders to start a dialogue and establish the direction for a gradual

approach to institutionalization. Alternatives to the traditional notion of a

secretariat were raised, including a “secretariat-non-secretariat” model and a two-

tiered approach. The former suggests a temporary secretariat that consists of a staff

that manages summit preparations, communication and negotiations and sets the

agenda. The latter suggests that in addition to the management Troika — Sherpas

from the past, present and future hosts — there is a fixed body that would be

accountable to the Troika and whose technical staff would be responsible for

monitoring, archiving, record keeping and evaluating. It need not be a highly

bureaucratic or a formal institution as one scholar suggests, but it could start as a

cyber or virtual secretariat. To address these mid- to long-term structural questions,

it was also suggested that the G20 form a vision group with a two-year mandate to

deal with questions of membership, chairmanship and alternative models for a

secretariat.

Measuring Success at Seoul: the Challenge of the Currency Debate

Delegates were divided over establishing a criterion to measure success. Consensus

on the development initiative, argued by some, would reflect a major achievement,

as it would help consolidate the G20 and move it away from financial and

macroeconomic issues. As the world recovers from the financial crisis and the crisis

raison d’ être of the G20 wanes, agreement on the Korean development initiative is a

step forward in establishing a post-crisis mandate for the G20. At the same time,

participants recognized that the salience of the currency debate may overshadow

any consensus on development. As one participant noted, the key lever to global

rebalancing is the currency issue. Although the Seoul summit may not resolve

disagreements over the appreciation of the Chinese renminbi, some suggested that

an agreement between surplus and deficit countries to take action would be a

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positive direction. Some suggested that the currency debate could be couched

within the G20 Strong, Sustainable and Balanced Growth Framework and within a

multilateral setting such as the G20. As one participant maintained, the issue of

global imbalance is not only tied to China’s undervaluation of the renminbi, but the

United States needs to increase fiscal spending and address high unemployment and

infrastructure needs. Quantitative easing by a reserve currency country can have

leakage effects. There continues to be concern by large emerging market countries

such as China and Brazil and also current account surplus countries like Germany

that quantitative easing by the United States will have negative spillover effects.

Other issues for the Seoul summit to achieve are consensus on IFI reform and green

growth. The apparent agreement by G20 members over the details to increase IMF

vote shares of BRIC countries, and to transfer two chairs on the IMF’s Executive

Committee from Europe to emerging market countries would prove to be a major

achievement. Progress on green growth, as one Vietnamese scholar indicated, with a

commitment by industrialized nations to assist developing countries through

technology transfers, knowledge sharing, and financial assistance and incentives

also would be a positive outcome. Participants from Vietnam and Singapore also

suggested that the establishment of a concrete timeframe to conclude the Doha

Round negotiations would be well received, especially from developing countries.

Sustainability of G20 as an Institution

Accountability: Meeting Short- and Long-term Goals

On the question of the institutionalization and longevity of the G20, country

participants were divided about whether the G20 can or should widen its mandate.

Accountability and meeting agenda objectives would, according to some

participants, send the message that G20 leaders can cooperate and deliver on

important issues. Chinese participants were strongly of the view that the G20 first

needed to prove its effectiveness in meeting its current economic mandate before

venturing beyond to other subjects. Efficiency and accountability were identified as

two principles that were crucial for the sustainability of the G20. As one American

delegate noted, “G20 leaders should not overpromise at this stage but deliver on a

small steps that it [G20] can actually achieve. Leaders have to watch for the

expectation gap, the world will expect solutions.” At the same time, participants,

especially from the Korea and other G7 countries, noted that post the financial crisis,

the G20 needs to have a more definable function. The G20 leaders were brought

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together by the urgency of the financial crisis and as the global economy recovers,

the G20 must address other common challenges to convince the world of its

continuing relevance.

There was wide consensus that in the short term, G20 leaders must reach consensus

on IFI reform and address foreign exchange rate imbalances. Addressing the

development needs of emerging economies and low-income countries was

recognized as an integral issue for the G20. However, there was a greater divide

among participants on G20’s long-term goals.

Many of the Chinese participants, as noted above, expressed concern over widening

the agenda to include issues beyond financial and macroeconomic matters. As one

Chinese scholar pointed out, the G20 cannot replace existing international

organizations. “The ultimate implementer on security issues is the UN Security

Council. Quota reallocation in the IMF will be implemented by the IMF. If countries

move to implement the Doha Development Round on trade, it will ultimately be

done by the WTO.” However, on the global economy, as a Chinese scholar noted, the

world lacks a very high-level mechanism to deal with global economic and financial

issues. Many Chinese participants urged that given the current nascent and evolving

stage of the G20 and a general division of labour among existing international

organizations, the G20 should focus its attention on global economic issues. This

was also echoed by the Singapore participant, who found that security issues —

nuclear proliferation and Security Council reform — should remain in the purview

of the UN.

A Korean participant, however, suggested adding human security and climate

change to the G20 agenda. The latter issue received more support, as development

is linked to sustainable growth, energy scarcity and climate change. If one of the

objectives of the G20 is to raise the standard of living in developing countries, this

will inevitably put a strain on the environment, as one American participant noted.

The rise of the middle-class population in China and India is normatively a good

thing, as it lifts a significant population out of poverty. Yet at the same time, this

emergence of new middle classes in these countries will increase carbon emissions

and put on a strain on natural resources.

The globalization of threats and challenges, and the reality that countries are

increasingly mutually vulnerable, renders it necessary for G20 leaders to think long

term. As one American participant put it, “there is a deficit in the demand for global

governance and the supply for it.” Rather than replacing other global institutions,

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the G20 can provide direction and help shape the agenda of other international

organizations to deal with transnational problems. Because the G20 includes large

emerging economies and reflects shifts in political power, “the G20 is all we have in

the way of informal multilateralism that has inclusiveness of twenty-first century

world,” as one American participant stated. The global shift in power, he maintains,

is not only along economic lines, but political ones as well. Therefore, to leave

political security problems within the G8 neglects real power shifts that gave

impetus to the G20 in the first place. There is a common interest among states to

solve problems. Expansion of the G20 mandate is a form of “positive security” as one

participant put it, for states to actively deal with global challenges. The status quo

and institutional inertia is not in the national interest of states in a highly globalized

world. Emerging powers seek a seat at the table, not only for stature, but there is a

substantive reason for their desire for participation in global governance.

Legitimacy: Outreach, Representation and Membership Structure

There was a general agreement among participants that the G8 is an exclusive club

that no longer reflects real global power shifts. The elevation of the G20 in global

governance is a significant step in bringing emerging market and developing states

into the global decision making process. Nevertheless, the fact that the G20 is a self-

appointed body and there is a lack of an institutional mechanism to represent non-

members, international institutions and regional bodies, raises the question of

legitimacy. There were differences among participants regarding whether the G20

should expand membership, to whom and how it should institutionalize a

membership selection process. Chinese participants were cautious about expanding

membership. According to several Chinese scholars, it is too early to talk about

expansion and representation at this stage in the G20’s development. Increasing

membership now could decrease the effectiveness of the body, overwhelm or draw

the agenda away from global economic challenges. Expansion can further

exacerbate a collective action problem, which already exists with G20 members.

In contrast, other participants linked the membership process to the longevity of the

G20. As one American participant noted, failing to address structural questions like

membership, the “G20 can, overtime, follow the way of the G8 and UN Security

Council where membership is out of step with the real world.” It was suggested that

the G20 recalibrate its membership every five years, choosing the top two

economies from five or more regions and 10 economies after that. Although

extending invitations to regional groups, like ASEAN is a positive step, one

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participant noted that these organizations cannot represent all small- and medium-

sized countries. Moreover, summit leaders have not invited all regional bodies,

noting the absence of the Gulf Cooperation Council and Latin American bodies. To

ensure fuller representation of non-members, the 3G representative from Singapore

echoed support for the variable geometry mechanism to allow non-members to

participate in ministerial and working groups.

Several scholars agreed that the G20 should develop closer institutional ties with

the United Nations, which has years of experience in development and

implementation capacity. Given that the G20 is informal and can only deal with

issues in a political way — lacking legal binding authority and implementation

capacity — the G20 inevitably has to work with the UN as well as with other

international bodies to consult and coordinate on resolutions and treaties. However,

there was disagreement about the role that the UN Secretary General should play at

the meeting. While the representative of the 3G pressed that the UN Secretary

General should be invited to G20 summits and secure a seat at the table to represent

the voice of the General Assembly — the so-called 172 — an American participant

noted that the UN Secretary General cannot represent all members.

A scholar from Vietnam also echoed that without a membership structure, it would

be difficult for small and medium countries to see the G20 as a legitimate body. He

proposed that the G20 develop a mechanism to formalize the participation of

regional institutions. As the Chair of ASEAN, Vietnam has carried out consultative

meetings as well as bringing G20 issues for discussion at ASEAN. Although a

Vietnamese scholar praised this year’s efforts to include ASEAN, he raised concerns

that there was no mechanism to guarantee participation at next year’s summit.

Formalizing regional representation was presented by the Vietnamese participant

as more transparent and effective channel for small and medium states to express

their views. Non-members would be more comfortable relaying their concerns to a

regional chair than to approach G20 members on a bilateral basis. For instance, as a

Vietnamese participant noted, it would be extremely unlikely and politically unusual

for Malaysia, for example, to rely on Indonesia to convey its concerns to G20 leaders.

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Asian Leadership in Global Governance

Emerging Asian Powers and the G20

That Korea has assumed the duty of summit host and the number of Asian countries

represented at this year’s summit has risen, suggests an important regional dynamic

to global shifts in power. Participants were divided on both the empirical question

of why Asian members have not set a particular regional agenda or sought greater

collaboration, and the normative question of whether there should be one.

Given the level of interdependency between Asian economies as well as how Japan

and Korea’s experience could go a long way to deal with the undervaluation issue in

China, some participants were surprised by the near absence of inter-Asian

dialogue. Many of the Chinese participants highlighted that the diversity in the

region and particular bilateral relations renders it difficult to conceive of an Asian

agenda.

Other delegates raised the challenge of creating a regional composition within the

G20. As one Korean participant noted, “It seems to me it is not in the interest of the

G20 to have common Asian positions — better to have shifting coalitions on issues.”

Current issues on the G20 agenda, like financial reform, global rebalancing and

macroeconomic coordination, have not resulted in regional positions. It was also

argued that it was a positive development for G20 agenda issues to cut across

regions.

US and New Global Architecture

American participants pointed out the apparent renewal of interest in

multilateralism both from within the US administration and even from the wider

United States public. For the first time, the new 2010 United States National Security

Strategy — setting out US Administration’s security framework — emphasized the

importance of global institutions and new international architecture. Moreover,

President Obama’s leadership in renewing the Strategic Arms Reduction Treaty with

Russia, holding out the prospect of negotiation with Iran over the use of nuclear

power, joining ASEAN and establishing the nuclear summit, reflects a new zeitgeist

in Washington toward international cooperation. For the G20 to be able to sustain

its momentum depends, in part, on America’s renewed interest in Asia and global

governance.

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The Dilemma of China’s Position

On the question of China’s leadership in the new global architecture, there was a

clear position by the delegates from the advanced countries that China should take a

greater leadership role. China was characterized by one scholar as a “part-time

global player.” At the Toronto summit, President Hu Jintao was noticeable for

clarifying China’s interest, intent and initiative. If China is to be the “largest

beneficiary of globalization, it is expected to take leadership.”

Korean and Chinese participants offered different views to explain China’s reticence

and reluctance. As one Korean scholar noted, there is a distinction between

increasing total amount of global governance and increasing one’s share of it. The

language of sovereignty and non-interference still dominates the thinking of Asian

states. Countries like China and Indonesia seek a fair share in global governance

rather than to increase the total amount of it. As one Chinese scholar echoed, if

there is an “objective change in the international structure,” China does not want to

miss out on an opportunity to participate. At the same time China will not change

the current structure of global governance to increase its involvement.

Other Chinese scholars took a “Why China?” position. Citing that China has only

recently become a major power, a leadership role is a lot to ask of China, according

to these scholars. Comparing it to the United States at the end of Second World War,

it took the country 60 years to grasp global governance leadership. According to

Chinese participants, it is too soon for China to assume such a responsibility. A

Chinese scholar also noted that China’s rise is not a singular phenomenon. It is

complemented by the growth of other Asian economies, including Vietnam, India

Indonesia and Korea. Mechanisms of cooperation in East Asia have typically

originated by these small- and medium-sized powers, with China acting after a

period of time as an active partner.

China’s reluctance to take on a leadership position was also characterized by an

increasingly plural political system and varying views within China about global

governance. As one Chinese delegate remarked, there is a lack of consensus within

China concerning the role of the G20. On the one hand, the G20 has been credited for

coordinating an effective and collective response to the financial crisis. Moreover,

since the G20 includes emerging economies, like China, it is more reflective of shifts

in the global distribution of power and the interests of developing countries. Most

Chinese believe the G20 is a step forward in terms of enhancing the legitimacy and

efficacy of the current global governance architecture. However, at the same time,

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there remain disagreements about the future of the G20. The Chinese are puzzled

about the kind of platform the G20 will become, whether it is only a forum for major

powers or whether there is a role for developing countries. The second

disagreement concerns the role of the emerging BRIC countries to coordinate

effectively within the G20. Although many of the rising powers share similar visions

to institutionalize cooperation and reform the contemporary global order, this

coalition of emerging powers is issue-based. Further, for these countries the

economies and trade relations among these emerging powers are often more

competitive than complimentary. Therefore, whether the G20 is an effective body to

coordinate issues among emerging powers is much debated in China.

China’s ambivalence was also characterized by four major dilemmas. Firstly, there is

a perception gap between how China views itself and how the rest of the world

views China. The Chinese still view China as a large, low-income, developing country

and point to definitions from the IMF, World Bank and human development indexes

to highlight the developing country aspect of China. However, because of its size and

the aggregate and comprehensive national strength it has accumulated over the last

30 years, China’s influence is global. China’s status is more complex and straddles

between these multiple identities.

The second dilemma presented is that although China believes the G20 is legitimate

and has the potential to be the primary institution for global economic issues it is

concerned about protecting China’s independence over domestic economic policies.

There is a tension between China’s desire for the G20 to be an effective body and its

interest to preserve sovereignty and its own independence over domestic affairs.

This explains, in part, China’s ambivalence over the mutual assessment process that

has been agreed to by the G20 leaders. China believes this mechanism should be

consultative and instructive in nature, while other G20 leaders and officials believe

the G20 and the tasked IMF should have more authority to intervene in order to

help coordinate policies more effectively multilaterally.

The third challenge concerns China’s role in managing inter- and intra-

coordination: the former referring to coordination with G20 members; and the

latter referring to coordination with non-G20 members. China should focus summit

consultation as well as coordination increasingly with the other major economic

powers — US, EU and Japan, forming a new G4 bloc within the G20. Rather than

acting as a bridge between new emerging economies and G4 countries, China finds

itself sandwiched between them.

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The fourth challenge is that domestic policies are shaped by increasingly pluralized

and diverse views. It is now more difficult for China to develop its own policies

without taking account of international implications. For instance, China’s local

innovation policies, strategic industrial policies have roused strong responses by the

international community. It is increasingly more difficult for Chinese policy makers

to separate domestic politics from global politics.